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When do you use lump sum type of contract?

Construction Management
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Question added by Ali Harin , General Manager , Harinco For Contracting And Trading Company
Date Posted: 2013/08/08
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Joao Pereira
by Joao Pereira , Project Engineer - Project Management , Saudi Aramco

Mainly in Desing and Build contracts (FIDIC Yellow book) when project scope and project deliverables are clear and detailed defined.
The Yellow Book (the Plant and Design-Build Contract) is intended for use where the works are designed by the contractor.
Therefore its a lump sum contract, in which the contractor promises to deliver the project for a set price.
The contractor, therefore, takes the risk of quantities.

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